1. A Country Paper presented by the Philippines through the Philippine Ports Authority during the 36 th APA Meeting Siem Reap, Cambodia 8-10 December 2010 Port Development Through Public-Private Sector Partnership

2. Port Development Through Public-Private Sector Partnership I.INTRODUCTION II.DEVELOPMENT NEEDS OF PORTS III.PPA PRIVATIZATION FRAMEWORK IV.PPA PRIVATIZATION VENTURES V.INTROSPECTION I.INTRODUCTION II.DEVELOPMENT NEEDS OF PORTS III.PPA PRIVATIZATION FRAMEWORK IV.PPA PRIVATIZATION VENTURES V.INTROSPECTION

3. Port Development Through Public-Private Sector Partnership INTRODUCTIONINTRODUCTION

4. Introduction Manila Forum on Public-Private Sector Partnership Signaled the Philippine Government’s call for Public-Private Sector Partnership (PPP) Signaled the Philippine Government’s call for Public-Private Sector Partnership (PPP) Attended by key officials/representatives of business and financial institutions Attended by key officials/representatives of business and financial institutions Considered PPP as tool for delivering urgent projects in critical development areas Considered PPP as tool for delivering urgent projects in critical development areas Reinforced the government’s confidence on economic growth and self-reliance Reinforced the government’s confidence on economic growth and self-reliance Signaled the Philippine Government’s call for Public-Private Sector Partnership (PPP) Signaled the Philippine Government’s call for Public-Private Sector Partnership (PPP) Attended by key officials/representatives of business and financial institutions Attended by key officials/representatives of business and financial institutions Considered PPP as tool for delivering urgent projects in critical development areas Considered PPP as tool for delivering urgent projects in critical development areas Reinforced the government’s confidence on economic growth and self-reliance Reinforced the government’s confidence on economic growth and self-reliance

5. Introduction PPP and Port Development Provide funds for port development Provide funds for port development Reduce government’s financial exposure Reduce government’s financial exposure Maximize port facility utilization Maximize port facility utilization Upgrade existing port facilities Upgrade existing port facilities Broaden government’s capital base and dispersal of economic benefits Broaden government’s capital base and dispersal of economic benefits Provide funds for port development Provide funds for port development Reduce government’s financial exposure Reduce government’s financial exposure Maximize port facility utilization Maximize port facility utilization Upgrade existing port facilities Upgrade existing port facilities Broaden government’s capital base and dispersal of economic benefits Broaden government’s capital base and dispersal of economic benefits Benefits:

6. Port Development Through Public-Private Sector Partnership DEVELOPMENT NEEDS OF PORTS

7. Master Plan on ASEAN Connectivity Support ASEAN Community establishment by 2015 Support ASEAN Community establishment by 2015 Impel ASEAN ports to explore and tap resources for port development Impel ASEAN ports to explore and tap resources for port development Identify key infrastructure deliverables by 2015 Identify key infrastructure deliverables by 2015 Support ASEAN Community establishment by 2015 Support ASEAN Community establishment by 2015 Impel ASEAN ports to explore and tap resources for port development Impel ASEAN ports to explore and tap resources for port development Identify key infrastructure deliverables by 2015 Identify key infrastructure deliverables by 2015 Development Needs of Ports

8. ZAMBOANGA ZAMBOANGA GENERAL SANTOS DAVAO ILOILO ILOILO MANILA MANILA South Harbor North Harbor MICT BATANGAS CAGAYAN DE ORO PPA Vision Ports.... control more than 60% of trade PPA Vision Ports.... control more than 60% of trade OZAMIS

9. Statistics20052006200720082009 Shipcall 10,7879,61110,0549,1569,919 Cargo 2,441,9842,365,8582,226,4942,242,3512,332,392 Container 87,19284,48575,78281,93582,559 Passenger 2,321,7461,989,9362,050,3151,901,3331,788,941 Port of Iloilo Iloilo Development Needs of Ports Major Gateways of Trade

10. Statistics20052006200720082009 Shipcall 2,5322,4152,3412,2992,398 Cargo 3,450,0433,434,8823,515,4933,543,1433,398,791 Container 202,236178,458161,989150,207140,860 Passenger 1,381,5661,233,6051,188,0081,034,9371,016,453 Port of Cagayan de Oro Port of Cagayan de Oro Development Needs of Ports Major Gateways of Trade

11. Statistics20052006200720082009 Shipcall 963930911861969 Cargo 3,124,9633,102,3653,372,0233,597,3963,863,137 Container 225,719260,743298,671349,005392,027 Passenger 152,927120,826105,93989,16871,673 Port of Davao Davao Development Needs of Ports Major Gateways of Trade

12. Statistics20052006200720082009 Shipcall 9601,0049369781,027 Cargo 1,603,5892,108,4991,678,0411,936,8541,903,120 Container 110,10897,322103,579113,886126,559 Passenger 194,232178,532161,596112,787104,967 Port of General Santos Port of General Santos Development Needs of Ports Major Gateways of Trade

13. Port of Zamboanga Zamboanga Statistics20052006200720082009 Shipcall 9,9018,6227,7986,7665,995 Cargo 1,576,4211,475,5541,592,6641,575,2061,546,523 Container 64,09360,02163,67564,96079,047 Passenger 2,914,4252,135,6672,163,8362,180,6882,326,213 Development Needs of Ports Major Gateways of Trade

14. Development Needs of Ports Privatized Major Gateways MICT Manila South Harbor Manila South Harbor Port of Batangas Port of Batangas Manila North Harbor Manila North Harbor

15. Development Needs of Ports Major Gateways Strategic Locations Role in ASEAN Port Network Link to BIMP-EAGA Regional Hubs

16. Development Needs of Ports Proposed Development Projects for Major Ports Project Proposed Works Estimated Project Cost (In Million PhP) Implementation Schedule Iloilo Commercial Port Complex (Expansion and Improvement Project) Proposed Extension of RC Wharf (260m x 26.26m) 1,773.432011-2015 Proposed Reclamation with Sheet Piles (200m x 204m) Cagayan de Oro Port Expansion and Improvement Project Proposed Construction of Back-up Area for Open Transit Shed (5,000 sq.m.) 1,797.092011-2015 Davao Port Expansion and Improvement Project Proposed Construction of Passenger Terminal Building, Allied Facilities, Parking Area and RORO Ramp at the South End of the Port 4,950.342011-2015

17. Development Needs of Ports Proposed Development Projects for Major Ports Project Proposed Works Estimated Project Cost (In Million PhP) Implementation Schedule General Santos Port Expansion and Improvement Project Proposed Installation of Quay Crane Rail (1 unit) 1,850.762011-2015 Zamboanga Port Expansion and Improvement Project Proposed Extension of RC Wharf (170m x 24m) 1,974.262011-2015

18. Development Needs of Ports Proposed Development Projects for Minor Ports Project Estimated Project Cost (In Million PhP) Implementation Schedule Dumaguete Port Expansion and Improvement Project 339.212011-2015 Tacloban Port Improvement Project200.002011-2015 Matnog Port Improvement Project210.012011-2015 San Andres Port Expansion Project 40.002011-2015 San Andres Port Expansion Project 40.002011-2015 Dapitan Port Improvement Project, Paving 52.742011-2015

19. Development Needs of Ports Proposed Development Projects for Minor Ports Project Estimated Project Cost (In Million PhP) Implementation Schedule Surigao Port Improvement Project, Paving 29.492011-2015 Nasipit Port Improvement Project, Paving 19.512011-2015 Masao Port Improvement Project 50.002011-2015 Esperanza Port Ro-Ro Ramp and PTB 40.002011-2015 Bais Port, Negros Oriental Port Development 50.002011-2015 Dumangas Port, Iloilo Improvement Project, Paving, Ro-Ro & PTB 80.002011-2015

20. Development Needs of Ports Proposed Development Projects for Minor Ports Project Estimated Project Cost (In Million) Implementation Schedule Lipata, Culasi, Antique Port Expansion Phase 2 40.002011-2015 Numancia Port, Akla Port Development 60.002011-2015 Numancia Port, Akla Port Development 60.002011-2015 Balabac Port Expansion Project 40.002011-2015 Coron Port Development Project180.002011-2015 Currimao Port Rehabilitation and Extension Project 100m Ro-Ro Ramp 50.002011-2015

21. Development Needs of Ports Proposed Development Projects for Minor Ports Project Estimated Project Cost (In Million) Implementation Schedule Kalamansig Port Improvement, Reclamation & Concrete Paving of 3,600sq.m. shore area installation of 9 pcs., V-type RDF, Construction of TMP Bldg. 32.402011-2015 Taytay Port Expansion Project100.002011-2015 Calapan Port Admin. Bldg. & Site Development Project 80.002011-2015 Plaridel Port, Port Expansion Project100.002011-2015

22. PPA Medium Term Port Development Project (2011 – 2015).... requires Gross Funding of PhP14 Billion Development Needs of Ports

23. PPA PRIVATIZATION FRAMEWORK Port Development Through Public-Private Sector Partnership

24. Comprehensive National Economic Reforms Deregulation Deregulation Liberalization of Foreign Exchange Liberalization of Foreign Exchange Passage of New Foreign Investment Law Passage of New Foreign Investment Law Passage of New Foreign Banking Act Passage of New Foreign Banking Act Passage of Build-Operate-Transfer (BOT) Law Passage of Build-Operate-Transfer (BOT) Law Deregulation Deregulation Liberalization of Foreign Exchange Liberalization of Foreign Exchange Passage of New Foreign Investment Law Passage of New Foreign Investment Law Passage of New Foreign Banking Act Passage of New Foreign Banking Act Passage of Build-Operate-Transfer (BOT) Law Passage of Build-Operate-Transfer (BOT) Law PPA Privatization Framework

25. The role of ports in the Philippines has been regarded with utmost importance due to the country’s archipelagic topography.

26. PPA Privatization Framework PPA Privatization Schemes Whole Terminal Leasing Whole Terminal Leasing Facilities and Real Estate Property Leasing Port Services Contracting Port Services Contracting

27. PPA PRIVATIZATION VENTURES Port Development Through Public-Private Sector Partnership

28. PPA Privatization Ventures In port development, PPP bridges the gap between what PPA can undertake and what the private sector can offer.

29. The MICT Experience - A classic success story of the Philippine Ports Authority’s PPP initiative

30. PPA Privatization Ventures The MICT Experience Highlights:Highlights: 1.PPA Takeover of MICT in 1978 Assumed jurisdiction from Bureau of Customs Assumed jurisdiction from Bureau of Customs Incurred only two (2) foreign vessels Incurred only two (2) foreign vessels Handled only a total of 2,858 metric tons of cargo Handled only a total of 2,858 metric tons of cargo Provided with minimal port facilities Provided with minimal port facilities Equipped with only two (2) container cranes as main cargo handling implements Equipped with only two (2) container cranes as main cargo handling implements 1.PPA Takeover of MICT in 1978 Assumed jurisdiction from Bureau of Customs Assumed jurisdiction from Bureau of Customs Incurred only two (2) foreign vessels Incurred only two (2) foreign vessels Handled only a total of 2,858 metric tons of cargo Handled only a total of 2,858 metric tons of cargo Provided with minimal port facilities Provided with minimal port facilities Equipped with only two (2) container cranes as main cargo handling implements Equipped with only two (2) container cranes as main cargo handling implements

31. PPA Privatization Ventures The MICT Experience Highlights:Highlights:. PPA-MICT Port Development by Administration 2. PPA-MICT Port Development by Administration Spurred by severe cargo congestion problems in Manila South Harbor Spurred by severe cargo congestion problems in Manila South Harbor Implemented at a cost of PhP300 Million Implemented at a cost of PhP300 Million Provided major improvements in port facility Provided major improvements in port facility Augmented cargo handling equipment inventory Augmented cargo handling equipment inventory. PPA-MICT Port Development by Administration 2. PPA-MICT Port Development by Administration Spurred by severe cargo congestion problems in Manila South Harbor Spurred by severe cargo congestion problems in Manila South Harbor Implemented at a cost of PhP300 Million Implemented at a cost of PhP300 Million Provided major improvements in port facility Provided major improvements in port facility Augmented cargo handling equipment inventory Augmented cargo handling equipment inventory

32. PPA Privatization Ventures The MICT Experience Highlights:Highlights: PPA-MICT Port Development by Contract 3. PPA-MICT Port Development by Contract Secured to finance further MICT development requirements Secured to finance further MICT development requirements Implemented at a cost of US$27 Million and DM12.5 Million Implemented at a cost of US$27 Million and DM12.5 Million Enhanced port capacity to 450,000 TEUs Enhanced port capacity to 450,000 TEUs PPA-MICT Port Development by Contract 3. PPA-MICT Port Development by Contract Secured to finance further MICT development requirements Secured to finance further MICT development requirements Implemented at a cost of US$27 Million and DM12.5 Million Implemented at a cost of US$27 Million and DM12.5 Million Enhanced port capacity to 450,000 TEUs Enhanced port capacity to 450,000 TEUs

33. PPA Privatization Ventures The MICT Experience Highlights:Highlights: PPA Privatization Initiative 4.PPA Privatization Initiative Pursued as a port development strategy Pursued as a port development strategy Applied first privatization venture at MICT in 1988 Applied first privatization venture at MICT in 1988 Awarded MICT privatization contract to International Container Terminal Services, Inc. (ICTSI) Awarded MICT privatization contract to International Container Terminal Services, Inc. (ICTSI) Granted 15-year concession period, renewable for another 25 years Granted 15-year concession period, renewable for another 25 years Stipulated PhP247 Million contractual commitment for MICT port development Stipulated PhP247 Million contractual commitment for MICT port development PPA Privatization Initiative 4.PPA Privatization Initiative Pursued as a port development strategy Pursued as a port development strategy Applied first privatization venture at MICT in 1988 Applied first privatization venture at MICT in 1988 Awarded MICT privatization contract to International Container Terminal Services, Inc. (ICTSI) Awarded MICT privatization contract to International Container Terminal Services, Inc. (ICTSI) Granted 15-year concession period, renewable for another 25 years Granted 15-year concession period, renewable for another 25 years Stipulated PhP247 Million contractual commitment for MICT port development Stipulated PhP247 Million contractual commitment for MICT port development

34. PPA Privatization Ventures The MICT Experience Highlights:Highlights: PPA Privatization Initiative 4.PPA Privatization Initiative Extended ICTSI Contract for another 25 years, to expire in May 2038 Extended ICTSI Contract for another 25 years, to expire in May 2038 Obligated ICTSI to invest US$126 Million in additional civil works and equipment Obligated ICTSI to invest US$126 Million in additional civil works and equipment Provided the Philippine Government with substantial savings in port development Provided the Philippine Government with substantial savings in port development PPA Privatization Initiative 4.PPA Privatization Initiative Extended ICTSI Contract for another 25 years, to expire in May 2038 Extended ICTSI Contract for another 25 years, to expire in May 2038 Obligated ICTSI to invest US$126 Million in additional civil works and equipment Obligated ICTSI to invest US$126 Million in additional civil works and equipment Provided the Philippine Government with substantial savings in port development Provided the Philippine Government with substantial savings in port development

35. PPA Privatization Ventures The MICT Experience The MICT Experience Highlights:Highlights: MICT under ICTSI Management and Operation 5. MICT under ICTSI Management and Operation Intensified port activities resulting to significant growth in cargo throughput and shipping traffic Intensified port activities resulting to significant growth in cargo throughput and shipping traffic Introduced improvements in the quality of service delivery Introduced improvements in the quality of service delivery Re-invented MICT into becoming the largest and most modern international port in the country Re-invented MICT into becoming the largest and most modern international port in the country MICT under ICTSI Management and Operation 5. MICT under ICTSI Management and Operation Intensified port activities resulting to significant growth in cargo throughput and shipping traffic Intensified port activities resulting to significant growth in cargo throughput and shipping traffic Introduced improvements in the quality of service delivery Introduced improvements in the quality of service delivery Re-invented MICT into becoming the largest and most modern international port in the country Re-invented MICT into becoming the largest and most modern international port in the country

36. PPA Privatization Ventures The MICT Experience Highlights:Highlights: 5. MICT under ICTSI Management and Operation Showcased ICTSI capabilities as port operator with international caliber Showcased ICTSI capabilities as port operator with international caliber Spurred ICTSI to launch dynamic overseas and domestic expansion program in 1994 Spurred ICTSI to launch dynamic overseas and domestic expansion program in 1994 Earned for ICTSI the respect and regard as a reputable key player in the port industry Earned for ICTSI the respect and regard as a reputable key player in the port industry 5. MICT under ICTSI Management and Operation Showcased ICTSI capabilities as port operator with international caliber Showcased ICTSI capabilities as port operator with international caliber Spurred ICTSI to launch dynamic overseas and domestic expansion program in 1994 Spurred ICTSI to launch dynamic overseas and domestic expansion program in 1994 Earned for ICTSI the respect and regard as a reputable key player in the port industry Earned for ICTSI the respect and regard as a reputable key player in the port industry

37. PPA Privatization Ventures Other PPA Privatization Endeavors Manila South Harbor Manila North Harbor Batangas Port Container Terminal A-1, Phase II Manila South Harbor Manila North Harbor Batangas Port Container Terminal A-1, Phase II

38. PPA Privatization Ventures Other PPA Privatization Endeavors Manila South Harbor Management Contract awarded to Marina Port Services, Inc. (MPSI) in March 1987 MPSI granted exclusive management and operation of arrastre services Management Contract covered an 8-year concession period to expire in March 1995 Manila South Harbor Management Contract awarded to Marina Port Services, Inc. (MPSI) in March 1987 MPSI granted exclusive management and operation of arrastre services Management Contract covered an 8-year concession period to expire in March 1995

39. PPA Privatization Ventures Other PPA Privatization Endeavors Manila South Harbor Manila South Harbor MPSI changed company name to Asian Terminals, Inc. (ATI) in 1993 MPSI changed company name to Asian Terminals, Inc. (ATI) in 1993 ATI entered into Compromise Agreement in 1995 to fully integrate cargo handling services ATI entered into Compromise Agreement in 1995 to fully integrate cargo handling services Compromise Agreement extended Management Contract until 2007 Compromise Agreement extended Management Contract until 2007 Manila South Harbor Manila South Harbor MPSI changed company name to Asian Terminals, Inc. (ATI) in 1993 MPSI changed company name to Asian Terminals, Inc. (ATI) in 1993 ATI entered into Compromise Agreement in 1995 to fully integrate cargo handling services ATI entered into Compromise Agreement in 1995 to fully integrate cargo handling services Compromise Agreement extended Management Contract until 2007 Compromise Agreement extended Management Contract until 2007

40. PPA Privatization Ventures Other PPA Privatization Endeavors Manila South Harbor Manila South Harbor ATI entered into Supplemental Contract in 1998 extending concession period until 2013 ATI entered into Supplemental Contract in 1998 extending concession period until 2013 ATI to invest not less than US$300 Million in ten years on infrastructure and equipment ATI to invest not less than US$300 Million in ten years on infrastructure and equipment ATI invested US$134 Million from 1998 to 2008 in infrastructures and equipment ATI invested US$134 Million from 1998 to 2008 in infrastructures and equipment Port capacity enhanced to annual total of 2,400 shipcalls, 15.5 MMT cargo and 860,000 TEUs Port capacity enhanced to annual total of 2,400 shipcalls, 15.5 MMT cargo and 860,000 TEUs Manila South Harbor Manila South Harbor ATI entered into Supplemental Contract in 1998 extending concession period until 2013 ATI entered into Supplemental Contract in 1998 extending concession period until 2013 ATI to invest not less than US$300 Million in ten years on infrastructure and equipment ATI to invest not less than US$300 Million in ten years on infrastructure and equipment ATI invested US$134 Million from 1998 to 2008 in infrastructures and equipment ATI invested US$134 Million from 1998 to 2008 in infrastructures and equipment Port capacity enhanced to annual total of 2,400 shipcalls, 15.5 MMT cargo and 860,000 TEUs Port capacity enhanced to annual total of 2,400 shipcalls, 15.5 MMT cargo and 860,000 TEUs

41. PPA Privatization Ventures Other PPA Privatization Endeavors Manila North Harbor Manila North Harbor Manila North Harbor Modernization Project (MNHMP) implemented to increase existing port capacity Manila North Harbor Modernization Project (MNHMP) implemented to increase existing port capacity Manila North Harbour Port, Inc. (MNHPI) accepted in April 2011 the Management Contract responsibilities Manila North Harbour Port, Inc. (MNHPI) accepted in April 2011 the Management Contract responsibilities MNHPI to undertake port development, management, operation, and maintenance over a 25-year period MNHPI to undertake port development, management, operation, and maintenance over a 25-year period MNHPI to infuse a total of PhP2.27 Billion for port modernization projects MNHPI to infuse a total of PhP2.27 Billion for port modernization projects Manila North Harbor Manila North Harbor Manila North Harbor Modernization Project (MNHMP) implemented to increase existing port capacity Manila North Harbor Modernization Project (MNHMP) implemented to increase existing port capacity Manila North Harbour Port, Inc. (MNHPI) accepted in April 2011 the Management Contract responsibilities Manila North Harbour Port, Inc. (MNHPI) accepted in April 2011 the Management Contract responsibilities MNHPI to undertake port development, management, operation, and maintenance over a 25-year period MNHPI to undertake port development, management, operation, and maintenance over a 25-year period MNHPI to infuse a total of PhP2.27 Billion for port modernization projects MNHPI to infuse a total of PhP2.27 Billion for port modernization projects

42. PPA Privatization Ventures Marine Slipway Pier 2 Pier 4 Pier 6 Pier 8 Pier 10 Pier 12 Pier 14 Pier 16 Map of North Harbor Isla Puting Bato North Harbor Existing Layout Terminal 1: LO-LO Containers Terminal 2: LO-LO Containers Terminal 3: General Cargo Map of North Harbor Future Development Plan Manila North Harbor Manila North Harbor MNHPI to provide the following major components of the modernized port: MNHPI to provide the following major components of the modernized port:  Terminal 1 - for containerized vessel operations  Terminal 2 - for containerized vessel operations  Terminal 3 - for non-containerized and bulk/breakbulk vessel operaitons  Passenger Terminal Complex - two-story building  Passenger Terminal Complex - two-story building for passengers coming from Terminals 1 and 2 Manila North Harbor Manila North Harbor MNHPI to provide the following major components of the modernized port: MNHPI to provide the following major components of the modernized port:  Terminal 1 - for containerized vessel operations  Terminal 2 - for containerized vessel operations  Terminal 3 - for non-containerized and bulk/breakbulk vessel operaitons  Passenger Terminal Complex - two-story building  Passenger Terminal Complex - two-story building for passengers coming from Terminals 1 and 2 Other PPA Privatization Endeavors

43. PPA Privatization Ventures Other PPA Privatization Endeavors Batangas Port Container Terminal A-1, Phase II Batangas Port Container Terminal A-1, Phase II Management Contract awarded to ATI on March 25, 2010 Management Contract awarded to ATI on March 25, 2010 ATI to undertake management, operation, development, maintenance, and promotion ATI to undertake management, operation, development, maintenance, and promotion ATI to deliver arrastre, stevedoring, storage, and related container handling services ATI to deliver arrastre, stevedoring, storage, and related container handling services ATI to provide necessary facilities, cargo handling equipment, gears, and safety implements ATI to provide necessary facilities, cargo handling equipment, gears, and safety implements Batangas Port Container Terminal A-1, Phase II Batangas Port Container Terminal A-1, Phase II Management Contract awarded to ATI on March 25, 2010 Management Contract awarded to ATI on March 25, 2010 ATI to undertake management, operation, development, maintenance, and promotion ATI to undertake management, operation, development, maintenance, and promotion ATI to deliver arrastre, stevedoring, storage, and related container handling services ATI to deliver arrastre, stevedoring, storage, and related container handling services ATI to provide necessary facilities, cargo handling equipment, gears, and safety implements ATI to provide necessary facilities, cargo handling equipment, gears, and safety implements

44. INTROSPECTIONINTROSPECTION Port Development Through Public-Private Sector Partnership Whichever path needs to be taken in implementing Public-Private Sector Partnership, upholding the stake of the common good should supremely prevail over any other privatization outcome and benefits.

45. Port Development Through Public-Private Sector Partnership A Country Paper presented by the Philippines through the Philippine Ports Authority during the 36 th APA Meeting Siem Reap, Cambodia 8-10 December 2010